Friday, December 14, 2012

Fiscal Fridays: Exceptions and rules

So I was going to post this last Friday, but a last-minute invite and a particularly stressful week had me heading straight out for a night on the town instead of going home after work. Thank goodness for casual Fridays and friends who are chill enough that I don't have to swap flats for heels and a sparkly top when we go out. Anyway.

Today, I want to touch first on the whole using-credit-cards-for-online-shopping thing. When I last mentioned it, after my insane Cyber Monday gift-shopping-spree, I mentioned that I used my card so much that it temporarily stopped working. And to be honest, I felt a little guilty/nervous about charging $300+ worth of gifts. But my dad, the unofficial financial guru of my family, read that post and had a few pointers.

He first mentioned that using a debit card when shopping online (or even at the gas station!) often puts a "hold" on your card, for more money than you're actually spending. If your balance is too low, you could actually wind up overdrafting while that hold is in place.

Even if you make it a habit to have at least a hundo or two on your debit card (in which case, congrats dude!), they don't offer the same consumer protections as a regular credit card. The protections vary from bank to bank, but typically it is much easier to contest a credit card transaction than a debit card transaction, in the event that your card number is compromised. And we all know that's a common risk when shopping online.

So bottom line, for this part of the post anyway, is that it's sometimes better to use a credit card. Just make sure you track how much you're spending, and pay it off as soon as possible. I like to pay mine off as soon as the transactions post to my online banking, which is usually a couple of days after the purchase. For Christmas shopping, I created a new "budget" in the Spendings app I use to help with my various budgets like groceries, gas, and the like. (More on that, and other useful budgeting apps, here.) Because I finished my Christmas shopping mostly on Cyber Monday, and the rest the following weekend, I was able to see exactly how much I was charging, so I didn't spend more than I could pay off before the end of this month.

So. That's it for the "exceptions" part of today's post. The "rules" part is really more of a tip, something I realized I have been subconsciously doing for a while now.

I used to have a real problem with impulse purchases. Instant gratification was the only thing I knew. See it, want it, buy it. And that's how I racked up thousands of dollars in credit card debt in my college years. Since hitting my "financial rock bottom," as I like to think of it, I've been actively stopping myself from big impulse spending. Now, it's at the point where I don't even realize that I'm restraining myself.

Basically, the rule is this. Never, ever make a large purchase the same day that you decide to make it. I have done this twice this week alone. The first was with a rug that our living room desperately needs, and the second was with tickets to see Lady Gaga in DC in February. In the latter case, I had the tickets in checkout, ready to purchase, credit card in front of me. I know I'm getting a freelance payment this week or next that is roughly equal to the cost of the tickets. My plan was to charge now, pay in a few days when the money came in. And then a little voice in my head said, why charge it? Why not just wait until you have the money in hand? So I cancelled the order.

My idol. I love her. Totally worth $200 and 5 hours of travel.

With the rug, I already had most of the money in hand, in the form of a "wellness rewards program" cash card that had about $100 left on it. The rug cost $150. Again, I realized that it was a big purchase, at least in terms of my typical budget, and maybe I should wait. So I did. And still am.

Source: via Emma on Pinterest
To be fair, it's a sweet rug and it would look awesome in our space.

It wasn't until yesterday, two days after my near-impulse purchases, that I realized the significance of my hesitation. That I truly have changed the way I think about money. I'm not saying I've conquered impulse buying--that's something I'll probably have to struggle against for the rest of my life--but I'm at least improving. In all likelihood, I'll probably still buy the concert tickets and the rug both. But at least I'll have thought about it, planned it out, and figured out where I'm going to cut back in the next couple of months in order to better afford the purchases. And that, my friends, is what this journey is really all about for me.


  1. Wow congrats! I'm pretty bad with impulse buys but I go through phases. Sometimes I can just walk away and be like "I don't need it" and other times I struggle so badly. Who knows, maybe it's linked to emotions or stress or something. I think you should get the tickets though. You might regret it more if you don't, especially if you consider her your idol :)

  2. Good for you. We often regret impulse purchases once the trance wears off. I've learned the same lesson you did, and have some bad stories to prove it.

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  4. I used to work as a teller and in the call center of a bank. The "hold" that you are talking about is a pre-authorization charge. Many places use pre-authorizations, and like you said.. often gas stations. However, I would like to add that the pre-authorization charges are usually just $1. I have seen larger amounts, but that was a rare occurrence. But, like you said, it's always a good idea to use your debit card as a credit card (that's what I always do).

    Also, Target is having a sale on a lot of their rugs right now. You can get a nice rug for under half of the price of that Overstock rug! And If you're looking for something more modern, Ikea has a lot of nice rugs for cheap too.


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